Moab Regional Hospital officials have formally asked the Grand County Council to assist them with the hospital’s financial woes by providing “seed money” to help MRH receive at least $840,000 in supplemental Medicaid payments for the current year.

Although MRH’s predecessor, Allen Memorial Hospital, had participated in Medicaid’s Disproportionate Share Hospital (DSH) program for years, the situation changed once the new Moab Regional Hospital was built, hospital CEO Roy Barraclough told the council at its regular meeting Tuesday night.

When Moab Valley Healthcare, Inc., a non-profit organization, took over ownership of Allen Memorial in 1995, the hospital was grandfathered into the DSH fund, even though it was no longer district owned, because it was still located in the same building. Because Moab Regional Hospital is in a new location and not owned by or affiliated with any governmental entity, state Medicaid officials determined that the facility was no longer eligible for participation in the supplemental DSH program.

The hospital subsequently challenged the disqualification, and officials were able to work out a compromise that would allow them to continue to participate, on the condition that a governmental entity agrees to sponsor or support the hospital by paying approximately 30 percent of the total DSH payments being applied for as up-front “seed” money. For 2012, the amount of seed money needed is approximately $277,000.

The hospital has until Nov. 29 to come up with the necessary matching funds, or it will lose all or part of its DSH funding, said Mike Bynum, chairman of the hospital board.

In May, the new hospital discovered that some $1 million in cash reserves were depleted to the point that officials were forced to choose between paying employees or paying the facility’s mortgage. The choice to pay employees meant that the mortgage payment was late, prompting the U.S. Department of Housing and Urban Development (HUD) to get involved. HUD provides the insurance on the hospital’s mortgage loan with U.S. Bank, Barraclough told The Times-Independent last month.

“Our billing got behind and our coding got behind, and when you don’t bill, you don’t collect any money. When you don’t collect money, your cash goes away. That’s basically what started this whole thing...,” Barraclough said during the September 17 interview. “We didn’t know how far down we were. We lost our CFO [chief finance officer] the day after New Year’s, and we had no financial reports until we hired a new CFO five months later.”

Last month, the hospital’s board of directors hired an outside health care consulting and hospital management firm to help the hospital develop a system to better manage finances and work through the current financial shortfall. Quorum Intensive Resources executive Jim Richardson told The Times-Independent last month that MRH has already significantly improved its financial situation by adopting new procedures.

This week, county council members said they would consider the issue further and make a decision soon, possibly at the council’s next scheduled meeting on Oct. 16.

“We, as gatekeepers of the taxpayers’ money, take that job very seriously,” council chairman Gene Ciarus told MRH officials on Tuesday. He said that the council will explore various possible options before making a decision.

Council member Audrey Graham noted that since the DSH program is ongoing, the seed payment would not just be a one-time event. The county would possibly have to impose a sales tax increase – perhaps as high as 0.5 percent – to cover the cost of making the DSH seed money payments in future years and to help provide extra funding for the Canyonlands Care Center, she said.

The sales tax issue could be placed on the June 2013 ballot if the Grand County Council approves the measure.

The Canyonlands Care Center, an extended-care nursing home facility attached to Moab Regional Hospital but operated by Grand County’s Canyonlands Health Care Special Service District, is also currently operating $15,000 to $50,000 in the red each month, care center accountant Tom Lacy told The Times-Independent last month. That amount equates to a budget shortfall of approximately $180,000 to $600,000 a year. The health care district receives some funding allocated by Grand County from state payments-in-lieu-of-taxes for mineral leases within the county.

If approved by voters, the sales tax would be collected on items sold at local restaurants, shops and other businesses, but it would not be a tax on food, Graham said Wednesday morning.

“It’s not a property tax and it’s not a food tax. It’s designed to hit the local public as little as possible,” Graham said in a telephone interview Wednesday. “It would impact visitors far more than local residents.”

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